The ASP Market Place
Over the last two years, the ASP market place has developed rapidly in the UK, bringing a number of advantages to businesses. Through delivering services that address capital outlay issues, scalability, management and support, ASPs are well positioned to assist a new spectrum of companies.
However, there is one burning issue that is impeding the development of UK based ASPs - connectivity.
Whilst most ASPs do not own private networks, customers need to be connected by other means. Choices are limited at present to a direct leased line, dial-up connection to the ASP, or a connection over the Internet. Each methodology is presenting a challenge to ASPs, and a solution is needed that addresses the cost of connection, speed, security and quality issues.
Over the last few months these issues have been addressed and it seems that a new solution is evolving - this is being introduced by Integrated Access Providers (IAPs). The IAP solution is offering a suitable alternative to the market place by providing discounted leased line connectivity for voice and data services.
Through utilising today's technology, voice and data is being converged over networks to provide a secure, always on connection between customers and service providers. In addition to this, some IAPs are using the voice traffic to contribute to the cost of the leased line. The knock on effect is that organisations can experience dramatically reduced IT costs through the ASP offering, and it is therefore becoming a more attractive proposition.
In the following diagram, the various connectivity options are explored:
The cost of leased lines in the UK
At the start of this year, the leased line industry in the UK was estimated to be worth in excess of £1.4 billion a year. With few players in the leased line industry, BT have maintained their position of largest market share and have set a premium rate for leased line connectivity in the UK.
This would not be questioned so frequently if leased line costs were the same throughout the different continents. However, the cost in the United States is a very different story. Whilst BT control the 'last mile' in the UK, the United States has been deregulated for a longer period and as a result, connectivity prices have adjusted through market forces.
Whilst high-speed city-to-city costs have declined in the UK, BT still controls the last mile for 64Kbps - 1 Mbps leased lines. At present, BT charges on a distance and speed matrix, therefore SMEs outside of London simply cannot afford connections.
As a result, ASP growth in the UK is being obstructed and only a small minority of companies in the UK has managed to embrace ASP services. Somehow, ASPs have to bridge the gap between customers and applications. This is where IAPs can fit in to the business model, however, this is a new and emerging market.
IAP voice & data convergence to subsidise connectivity
Integrated Access Providers are delivering converged voice and data services to provide a total communications solution for the customer.
This is being achieved using a variety of protocols including services over IP, ATM, SDH, etc. By using these technologies, a range of voice and dataservices can be placed down the leased lines to reduce communication costs. The following diagram explains:
Blue River Systems Ltd provides Service Management Consultancy to ASP's. Managing Director Paul Webb has held several senior Director roles within the ASP Industry and regularly speaks at ASP Conferences on Service and Security Management. Paul commented on the market place,
"The big issues for everyone are Quality of Service, the cost of bandwidth, and data security. The major Telco ASP players (such as Cable & Wireless) can offer an end-to-end service from the Application Server Farm to the users' desktop because they control the network.
This allows them to prioritise the traffic that keeps the users desktop alive, and to protect it from the vagaries of Internet performance and intrusion. These are key issues that must be solved to honour the Service Levels Agreements requested today by business ASP users.
IAP's can level the playing field again by providing smaller specialist ASP's with high quality network services that can meet these requirements. With IAP's providing services with ATM based quality of delivery, and the significant cost savings from sharing voice and data traffic efficiently, they become an important part of the Application Delivery value chain.
The follow-on advantages are that the entire market for ASP services could grow more quickly with lower cost, higher quality services resulting in more satisfied users and accelerating market acceptance of this new business model. This should help to deliver the much-vaunted but yet to be fully-realised benefits of ASPs.'
First Net is a UK based ASP already using the IAP solution for their customers. Dominic Marrocco, the Managing Director of First Net has also embraced the benefits delivered by IAPs.
"IAP is becoming a reality within the UK and has provided the kick-start the ASP market has been waiting for. This is the first time the savings and benefits of the ASP model can be further enhanced with the reduction in access costs.
At Firstnet, we feel our services, that are already revolutionising the ASP arena, will be further enhanced by the possibility of cost effective high speed bandwidth to more of the SME markets.'
Regardless of the technology deployed, everyone in the industry agrees that the key to a converged voice and data offering is the quality of service and support delivered by the IAP.
Both voice and data connectivity must address quality issues and redundancy.
8el is one of the few IAPs already delivering aggregated voice and data services. Justin Hamilton-Martin, Managing Director of 8el commented:
"With 8el's voice and data solutions, quality and service delivery has been our key focus. We are delighted that our solution has been welcomed by so many UK businesses. By cross-subsidising the cost of the leased line, we feel that we have already opened up the connectivity marketplace to SMEs - we hope that our services will also benefit the ASP marketplace as it develops."
A spokesperson from the ASP Industry Consortium also believes that the 8el technology offers an 'interesting solution' to ASP access for the future.